Hello, and help!

[Brenda Smith]

I run a tiny garden centre, in Manchester. Growth has been slow, but steady, over the past 6 years. The business became VAT registered on 01/12/16, which has made me feel rather unsettled: I don't mind the paperwork, or rules, as much as the cash I will have to hand over to HMRC. To save money, I've decided to do my own book keeping and VAT return (my accountant did pretty much everything last year). I've been reading a lot, mostly free stuff on the internet, and I think I've got my head around most things, but I just wanted to check something, so I hope someone can help...

I issued an invoice to a housing association in October, for plants and services. As I wasn't VAT registered then, I didn't charge VAT. This invoice was not paid until December, after I became VAT registered. Do I have to pay VAT on this income to HMRC?

Thanks in advance for your help,

Brenda.

 

[STDFR33]

No.

 

[Brenda Smith]

That's quite emphatic - thanks!

 

[Louisa@AardvarkAccounting]

If you are registered for VAT under the invoice basis, then the above post is correct. As you raised the invoice at the time and most likely performed the services before you were VAT registered, you won't have any VAT to pay.

However if you are on the cash based scheme, the VAT is calculated when your invoices come into the account.

 

[Brenda Smith]

Thanks, but how do I know which scheme I'm on? I'm a retailer.

 

[STDFR33]

If you are registered for VAT under the invoice basis, then the above post is correct. As you raised the invoice at the time and most likely performed the services before you were VAT registered, you won't have any VAT to pay.

However if you are on the cash based scheme, the VAT is calculated when your invoices come into the account.

Do you have a link for that?

 

[UK Contractor Accountant]

IfHowever if you are on the cash based scheme, the VAT is calculated when your invoices come into the account.

don't think that's correct for invoices raised prior to being vat registered but payment received after registration date. Time of supply rules apply!

 

[STDFR33]

don't think that's correct for invoices raised prior to being vat registered but payment received after registration date. Time of supply rules apply!

Indeed.

My understanding is that an adjustment would need to be made for payments received in relation to supplies made before registration.

I await a link ...

 

[Louisa@AardvarkAccounting]

Yes, apologies, as the invoice will have been raised before the time of registration, it will need to be adjusted in the first return, if they were on a cash basis scheme.

And as for knowing which scheme you are on, this is usually always invoice basis, unless you have requested the cash based scheme at registration. However you can switch onto cash basis at any time, at the beginning of your next VAT quarter.

 

[MyAccountantOnline]

Thanks, but how do I know which scheme I'm on? I'm a retailer.

Brenda slightly off topic but as you are dealing with your own VAT and it's quite important have a read here it should help.

 

[Brenda Smith]

There doesn't seem to be a definitive answer - yikes!

 

[Brenda Smith]

Thanks for replying folks. I have spoken to a person at HMRC who has told me I don't need to pay VAT, as I didn't charge VAT.